New jobless claims reached their highest point since October 2021, in the latest economic yellow light. The increase in jobless claims comes as the American economy continues to struggle with multiple headwinds, including inflation.
The Department of Labor released figures Thursday of 261,000 initial claims for the week ending June 3. This was 28,000 more than the previous week and 25,000 more than expected. Currently, there are nearly 1.8 million Americans collecting unemployment benefits.
Furthermore, May’s unemployment rate clocked in at 3.7%, an increase of 0.3%. The increase in the unemployment rate could also be a sign of a potential economic slowdown.
While Biden brags about the economy, but leaves out adjustments for the pandemic. New jobless claims are surging. https://t.co/X5odALzXbU
— Andrew Wilkow (@WilkowMajority) June 9, 2023
In addition, the American trade deficit increased to its highest point in eight years. The increase in imports is likely to reduce the nation’s GDP growth rate. The overall trade deficit increased to almost $75 billion, a 23% increase.
Much of the reason for the increase in the trade deficit is due to a more than 5% decline in exports, which was the most significant decrease in three years.
The nation’s first-quarter GDP growth rate declined relative to the previous quarter, as well. The economy grew at 1.1% to start 2023, which was less than half of the 2.6% annualized growth in the last quarter of 2022.
Currently, many economists do not believe that the Federal Reserve will raise interest rates at its June meeting. The news represents mixed news for investors. Should the Fed not increase rates, it could be a sign that the economy has weakened to the point that the central bank fears that another increase could spark a recession.
On the other hand, should the Fed not raise rates, there is a significant chance that the ongoing issues with inflation would continue. Inflation has remained above 4% since April 2021, three months after President Joe Biden took office.
The difficult economic picture may also present political problems for the president in advance of the 2024 election. Biden currently holds a 42% approval rating in the RealClearPolitics polling average, while more than 55% disapprove.